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Sydney ranks among top 3 global data centre markets


Sydney has been ranked as the third top global data centre market in 2020, up from 19th in 2019 and climbing the ladder more rapidly than any other market, according to Cushman & Wakefield’s 2021 Data Centre Global Market Comparison Report.

Sydney has been ranked as the third top global data centre market in 2020, up from 19th in 2019 and climbing the ladder more rapidly than any other market, according to Cushman & Wakefield’s 2021 Data Centre Global Market Comparison Report.

The report evaluated 1,189 data centres in 48 location, utilising a unique weighted methodology focusing on real estate and physical considerations, ecosystem advantages and political and regulatory review.

The research shows that Sydney placed behind only Northern Virginia and Chicago in the rankings and outpaced some of the world’s most renowned data centre markets including Silicon Valley, Singapore and London.

While Sydney performed well across a range of criteria, it principally climbed the rankings due to its large and growing market size that is approaching 300 MW, a significant development pipeline of approximately 172 MW, the sustainability environment and other factors that confirm a highly conducive market. Sydney was ranked second in sustainability, one of only four markets operating entirely on renewable energy sources.

One of the most notable features of the Sydney data centre market is the development pipeline, the fourth largest globally. Large-scape developments under construction include Macquarie’s Intellicentre 3 East project, NextDC’s S2 project, Digital Realty’s Erskine Park III, Fujitsu’s 20MW centre in Western Sydney and Alpha DC Fund’s KDC Sydney 1 project.

From a real estate and infrastructure investment perspective, Sydney remained an active market in 2020 with a number of major deals reaffirming data centres as an emerging asset class. Cushman & Wakefield research identified five major transactions during 2020 that were reported to be in the vicinity of $6 billion, most notably the Air Trunk Data Centre Portfolio acquired by Macquarie Infrastructure and Real Assets (MIRA) and the Future Fund taking a 24.1% stake in Canberra Data Centres (CDC) for an undisclosed amount.

Cushman & Wakefield’s Head of Research, Australia and New Zealand, John Sears, said: “2020 was a turning point for Sydney’s data centre market, as the pandemic turbo charged the demand for cloud-based services amid mass remote working and eCommerce experiencing a watershed boom.”

“Only a year ago Sydney was classified as a secondary or alternative market, but after a year of major development announcements and government continuing to overhaul its IT infrastructure, Sydney has expressly established itself among major data centre markets globally.”

“The sector provides commercial real estate investors with an opportunity to diversify their portfolio into a rapidly expanding sector. If you look at markets like the US, data centres are an increasing feature of many REITS’ portfolios, and as the Sydney market develops amid supportive market conditions, we expect local and institutional investor demand to grow.”

Cushman & Wakefield Director, Tenant Advisory Group, Grant Bulstrode, said: “The data centre market is playing a significant role in driving the price of industrial land to record highs, with some Western Sydney plots reaching $1,000 per sqm. As almost all operators hunt for new sites to develop or land bank, in many instances they are outbidding the traditional industrial owners and institutions.”

“The key requirements for operators are sufficient power and a good fibre supply, and networks are being expanded every month. Among data centre operators there appears to be no preference towards any of Sydney’s major data centre markets - Western Sydney, North Shore and South Sydney. On a national level Greater Sydney remains the number one market followed by Melbourne, Canberra, Brisbane, Perth, and finally Adelaide.”

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